First-Quarter Business a Mixed Bag

National sales decline offsets gains in other areas.

When the market giveth, it’s easy to forget that the market also taketh away. But AAN papers across the country are getting a reminder this year; most, if not all, are trying to deal with a sharp decline in national ad revenue, as well as smaller setbacks that vary from market to market.

Overall, however, reports from randomly-selected papers and groups offer a mixed bag of results. And every executive interviewed expressed optimism for the rest of the year.

“I definitely see [the glass] as half full,” said Michele Laven, publisher of the Phoenix New Times and an executive vice president of sales for the New Times chain. The papers reporting to her are ahead in ad count, she says, “which is a positive sign.”

But the recurring theme in conversations with alternative paper execs is the sudden drop in national advertising, particularly from tobacco companies. Many papers, it seems, were feeling the effects well before AWN’s AdRap newsletter reported in March that national sales for February 2001 were down 51 percent from February 2000.

“For us, that decline began a year ago,” said Fran Zankowski, CEO of NewMass Media. “Last year, January and February were the worst we ever had.” That’s part of the reason why in late March the New Haven Advocate was showing a 12-percent gain over the same period last year; the Valley Advocate was up 5.2 percent. Zankowski attributed the growth to concerted efforts to land more dining and auto ads.

The losses in national ad revenue have been felt elsewhere in the chain. The Hartford Advocate is showing 1-percent growth over last year, and the Fairfield County and Westchester County papers are flat. Even some local and regional advertisers are cutting back, Zankowski said. The New England area didn’t benefit from the economic boom of the late ’90s as much as other parts of the country, Zankowski noted, but even so, advertisers are more wary this year than last.

“The growth doesn’t seem like it’s as rock-solid as in past years,” he said. “Our customers seem more conservative than before.”

And the same seems to be true on the West Coast. David Cohen, COO of Metro Newspapers, said his papers — Metro Silicon Valley, Metro Santa Cruz, Urban View (Oakland) and Sonoma County’s Northern California Bohemian — have seen an unexpected drop in music-industry advertising. “And it’s not like they’re putting their money anywhere else, either,” Cohen said.

On the other hand, he added, restaurant advertising is up. “The minute things slow down, [restaurants] start to advertise again,” he said.

The Chicago Reader and Washington City Paper are getting hit from almost all sides, said Tom Yoder, treasurer of Chicago Reader Inc. “It’s been bad in national display, it’s been bad in local display, it’s been bad in personals, but for us, at least, not in classifieds,” he said. Combined, these downturns have left the Reader down 5.5 percent overall from last year, and the City Paper down 11 percent.

“The ironic thing,” he added, “is there used to be many down periods for [daily] papers in the past, and [alternatives] used to be almost opposite. … [Now] it’s starting to look like we’re in the same cycle.”

Columbus Alive has seen only slight growth in early 2001, as compared to early 2000, said publisher Sally Crane. And ironically, that growth is a result of the drop in national advertising, in a manner of speaking. Last year, a “disproportionate” amount of Alive’s sales came from AWN. “So we really focused last year on weaning ourselves from national advertising and growing our local advertising base,” Crane said. “And that has been successful for us, and I think it will really help us through this lean time.”

At Village Voice Media (VVM), owner of seven AAN papers, “the bad news is the same thing that a lot of people are moaning about: national is down,” said Albie Del Favero, executive vice president of VVM and group publisher of four of the papers. The losses vary from paper to paper, but all are down “substantially from last year,” he said.

On the other hand, most VVM papers are faring better than last year with local retail — enough so that most of the papers are meeting budget and even those that aren’t are showing some growth.

The New Times group, generally speaking, has seen losses in larger markets, like Phoenix and Denver, but growth in places like St. Louis, Kansas City and Houston. “Mid-sized retailers don’t have a lot of options out there,” said Laven, “and we haven’t jammed them with rates.”

The plummeting national sales have hurt, Laven said, but classifieds “has been a huge success story for our whole company.” Personals are waning, she noted, but the company’s efforts to go after more employment and back-page niche ads have paid off, as have investments in technology to make the reps’ jobs easier.

Portland-based Willamette Week finds itself in the opposite position: the paper finished its fiscal year in March “right on budget in display, with some shrinkage in classifieds,” according to Vice President of Sales and Marketing Russ Martineau.

And with tobacco advertising down and dot-com accounts “gone,” Willamette Week figures to do maybe half of the roughly $500,000 in national advertising it earned last fiscal year. So among the paper’s new goals is developing new national advertising categories, beyond cigarettes and liquor.

“We’ve had it so good for 10 years,” he said, speaking of alternatives in general, “that we need to get some practice at tougher sales environments.”

NewMass Media is addressing the losses by exploring new business models. After agreeing last year to produce a Playbill for a single client, the chain is now establishing a division to focus on Playbill accounts — it now has seven — and campus phone directories. The company also is going after distribution deals, after handling one for its parent, the Hartford Courant.

Metro Publishing is going after more large regional accounts to make up for some of the lost national revenue. “The mistake we all made,” Cohen said, “was [budgeting] on national ads. They should be gravy.” (Others echoed this sentiment, and curiously, also used food analogies: Yoder said national-ad revenue should be considered “manna from heaven,” and Martineau described it as “the whipped cream and cherry on top of the sundae.”)

The Metro papers are also hiring more sales reps. So are the New Times papers, according to Laven, where the mission has been to get the ad count up. “Ad count’s a great place to focus,” she explained. “It’s really a simple formula. If you have enough like advertising in the paper, [readers and advertisers] are going to flock to the paper.”

Martineau said Willamette Week is “budgeting for efficiency,” but added that the situation is hardly dire.

“I don’t think [the growth period] is over yet,” he said. “I don’t think consumers have really turned off the faucet, in terms of buying.”

Frank Lewis is a staff writer for the Philadelphia City Paper.